Suppose Overlook wishes to buy 4,500 vests from Summer Fun. Summer Fun will not incur any variable selling and administrative expenses on the special order. The Summer Fun plant has enough unused capacity to manufacture the additional vests. Overlook has offered $9 per vest, which is below the normal sales price of $14.

Summer Fun manufactures flotation vests in Charleston, South Carolina. Summer Fun's contribution margin income statement for the month ended August 31, 2024, contains the following data: (Click the icon to view the cost information.) Suppose Overlook wishes to buy 4,500 vests from Summer Fun. Summer Fun will not incur any variable selling and administrative expenses on the special order. The Summer Fun plant has enough unused capacity to manufacture the additional vests. Overlook has offered $9 per vest, which is below the normal sales price of $14. Read the requirements. Data Table Requirement 1. Identify each cost in the income statement as either relevant or irrelevant to Summer Fun's decision. Income Statement Variable Manufacturing Costs Variable Selling and Administrative Costs Fixed Manufacturing Costs Fixed Selling and Administrative Costs For the Month Ended August 31, 2024 Sales in Units 35,000 Net Sales Revenue $ 490,000 Variable Costs: Requirement 2. Prepare a differential analysis to determine whether Summer Fun should accept this special sales order. (Enter ded Manufacturing 175,000 106,000 Selling and Administrative Total Variable Costs 281,000 in operating income Contribution Margin 209,000 Decision: Fixed Costs: Manufacturing Requirement 3. Identify long-term factors Summer Fun should consider in deciding whether to accept the special sales order. 121,000 86,000 Selling and Administrative Choose from any list or enter any number in the input fields and then continue to the next question. Total Fixed Costs 207,000 $ 2,000 Save for Later Operating Income Requirement 1. Identify each cost in the income statement as either relevant or irrelevant to Summer Fun's decision. Relevant / irrelevant Variable Manufacturing Costs Variable Selling and Administrative Costs Fixed Manufacturing Costs Fixed Selling and Administrative Costs Relevant / irrelevant Relevant / irrelevant Relevant / irrelevant Requirement 2. Prepare a differential analysis to determine whether Summer Fun should accept this special sales order. (Enter decreases to revenue or increases to costs with a parentheses or minus sign. Expected increase / decrease in revenue Expected decrease in fixed manufacturing costs D Expected decrease in selling and administrative costs Expected decrease in variable manufacturing costs Expected increase in fixed manufacturing costs Expected increase in selling and administrative costs Expected increase in variable manufacturing costs e Increase/ decrease in operating income Decision: Requirem sales orde Accept the special order Do not accept the special order In addition consider ti Requirement 3. Identify long-term factors Summer Fun should consider in deciding whether to accept the special sales order. In addition to determining the special order's effect on operating profits, Summer Fun's managers also should consider the following: O A. Will the special order customer come back again and again, asking for the same reduced price? OB. Will Summer Fun's other customers find out about the lower sale price Summer Fun accepted from Overlook? If so, will these other customers demand lower sale prices? O C. How will Summer Fun's competitors react? Will they retaliate by cutting their prices and starting a price war? O D. All of the above O E. None of the above